IRAQI BUSINESSMAN "CAUTIOUSLY" OPTIMISTIC ABOUT

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 001918

SIPDIS

E.O. 12958: DECL: 03/11/2014
TAGS: ECON PREL SOCI JO
SUBJECT: IRAQI BUSINESSMAN "CAUTIOUSLY" OPTIMISTIC ABOUT
IRAQ

REF: AMMAN 1722

Classified By: CDA David Hale for reasons 1.5 (b) and (d).


1. (C) Summary. An Iraqi businessman who operates a small
office supply factory in Baghdad told us that he is
cautiously optimistic about social and economic developments
in Iraq, and that he has increased production and is
operating two shifts at his Baghdad factory. He hopes for
better banking and credit services in Iraq and shared his
concerns about the July 1 transfer of power. He warned about
continuing strains in the Iraq-Jordan relationship and hoped
that time will heal deep wounds. End Summary.

IRAQI BUSINESSMAN OPTIMISTIC
--------------

2.(C) In a March 3 meeting with PolOff, Raid Rahmani, an
Iraqi businessman with factories in Amman and Baghdad, told
us that he is cautiously optimistic about business prospects
and life in general in Iraq. He cited a reduction in the
number of kidnappings, increased traffic around Baghdad until
midnight, the revaluation of the Iraqi dinar against the
dollar (although too volatile at times),higher salaries for
average Iraqi workers, improved and informative programming
on the Al-Iraqiyya television station and better access to
gasoline (at cheap prices) as delible signs of improvement.


3. (C) Rahmani owns a factory that produces markers,
ballpoint pens, rulers and crayons in Baghdad. He said he
currently employs around 50 Iraqis on two shifts and is
looking to hire more. He added that unskilled labor costs
have steadily risen from USD $12/month to an average of USD
$50-60. He has advertised in a local newspaper looking to
hire more workers and was disappointed with the lackluster
response. He blamed the level of insecurity in and around
Baghdad for the lack of interest and stressed an improvement
in security will be directly linked to an improvement in the
unemployment situation. He proudly declared that business
was great and that he is making money exporting primarily to
Jordan, and is interested in expanding.

BANKING SERVICES: IMPROVEMENT EXPECTED
--------------


4. (C) Rahmani complained about the poor quality and
availability of banking services in Iraq. He said there was
no "functioning" banking or insurance system and bemoaned the
lack of "letters of credit" and other credit programs to
assist Iraqi businessmen. The lack of such services, he
added, was a deterrent to those in Iraq with little or no
capital who may be interested in starting businesses of their
own. He disliked having to deal with cash in many of his own
business transactions. (Comment: According to our other
informed sources, this is not an entirely accurate picture of
banking services in Iraq. While letters of credit are
expensive and difficult for Iraqi firms with no outside
assets or partner to obtain, they are available. We know
that Jordan's Export and Finance Bank is offering letters of
credit to private Iraqi businessmen through its working
relationship with the National Bank of Iraq. This
arrangement, however, may have been placed in jeopardy by
recent Iraqi government activity - Reftel A). Further,
Embassy sources told us there are at least seven private
Iraqi banks offering letters of credit and doing electronic
transfers in Iraq.

JULY 1: POLITICAL UNCERTAINTY
--------------


5. (C) On the political front, Rahmani opined that the
uncertainty over the July 1 handover is creating anxiety for
average Iraqis. Many Iraqis are worried about what the
transfer of power will mean, how it will affect them and how
the country will develop once Iraqis are left to govern
themselves.

IRAQ-JORDAN RELATIONS: STRAINED
--------------


6. (C) On Jordan-Iraq relations, Rahmani was frank about the
level of resentment felt by many Iraqis against Jordan and
its citizens. He said Iraqis see Saddam-era Iraqis living it
up in Jordan, being well-received, buying up expensive villas
and driving fancy cars. He said Iraqis recognize that these
people owe their wealth to the Saddam regime and that their
"ill-gotten" wealth was made at their expense. That Jordan
grants Jordanian citizenship to Iraqis who invest JD 750,000
(USD $1,059,300) in Jordan, he added, touches on a raw nerve
for many Iraqis who feel that money spent by former regime
officials belongs to Iraq and Iraqis.

IRAQIS NEED TO SEE MORE POSITIVE CHANGE
--------------

7. (C) Rahmani said that while he remains optimistic, the
U.S. must make every effort to let average Iraqis "feel" that
change is progressing (electricity blackouts every 3 hours
must improve),engage Iraqi businessmen and provide them with
business opportunities. As an Iraqi, he said, "if I make a
profit I reinvest it in Iraq, while a Lebanese, Egyptian or
Kuwaiti repatriates such profit to his respective country."

COMMENT
--------------


8. (C) Rahmani's comments mirror those who have heard from
other Iraqi businessmen that the situation is improving --
but not quickly enough. End Comment.

9. (U) Baghdad minimize considered.

Please visit Embassy Amman's classified website at
http://www.state.sgov.gov/p/nea/amman or through the
Department of State's SIPRNET site.
HALE